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20 september 2018

It's our responsibility to capture the imagination of future generations towards diamonds

11 december 2017

vin_lee_xx.jpgAs CEO of Beverly Hills-based Grand Metropolitan - a privately-held luxury goods holding company with a 130-brand portfolio - Vin Lee carries the burden rather lightly on his shoulders.

Having migrated from Canada as a baby, it did not take long for Vin Lee to ascend the US luxury world and establish himself as a formidable businessman.

Besides his business in the diamond industry, he monitors his companies' participation in charity auctions, celebrity events, and red-carpet functions. Constantly on the move, he spends his time in South Florida & Southern California.

In an interview with Rough & Polished, Vin Lee elaborates on his earlier days; entry into business; and his hopes for the future of the industry.

Some excerpts:

Please tell us your story...

I came to the US in 1970. My parents are very hard working and loving people. They encouraged me to explore varied interests. I earned patents for internally lit mechanical signs. The kind you now see as roadside billboards or on the sides of buildings or vehicles. That has grown to a $6 billion industry worldwide.

Wanting to celebrate, I went to a local jeweler for a Rolex President. The owner regaled romantic stories of the diamond trade. Hours later I emerged having made my first investment in the jewelry industry. For the next couple of years, I officed out of that location, reading 25 years of back issues of National Jeweler, JCK, and Modern Jeweler Magazines. I believe this unique introduction to the diamond markets coupled with my outsized ambition is what fueled me towards an industry roll-up of jewelry brands.

Can you define your jewelry business under Grand Met?

Many of our nameplates are over a century old and some have been around since the late 1700s. Finlay Enterprises, owns 20 of the TOP 50 retail jewelry banners of the last century in North America. While Finlay itself was a billion-dollar entity, the Group owns several hundred million dollar national brands such as Whitehall, Crescent, Marks Bros., Lundstrom, and Friedman’s Jewelers. Finlay operated Société Nouvelle d'Achatde Bijouterie (SONAB), once France’s largest leased department store jewelers with over 100 showrooms. We are not currently operating brick & mortar stores outside of North America.


Please elaborate more on Finlay. How much does jewelry contribute to Grand Met?

Finlay maintains about 30 different retail and consumer jewelry banners. Below is our jewelry portfolio:

Finlay Fine Jewelers, Diamond Park, Jay B. Rudolph, New York Jewelry Outlet, Park Promenade, Luxuria, Société Nouvelle d'Achatde Bijouterie, Lundstrom Jewelers, Marks Brothers, Whitehall Co. Jewellers, L. Luria & Son, Linz Brothers, Friedman’s Inc., A.A. Friedman, Crescent Jewellers, Bucceli Gem, Ephraim Brasher, Jean Goujon, Missirs, L.D. Giddens & Son, Shifrin-Willens Jewelers, Merksamer Jewelers, Haute Bijouterie, Corrigan’s Jewelers, Sweeney’s Jewelers, Fine Jewelers Guild, Ceylats, Diamonds on Rodeo, Diamonell, Gotthelf, Henricks, Vin Lee Jewelers, Zemil Jewelers, Bailen, DuQuet Jewelers, Goldmans, Stockdale Jewelers, Shreya, Silvermans, Wingrove, Woodstock, Coral Jewelers, Higinbotham, Jewelry Banker, Krisselmeyer, Roskells, Ziaris, Barlow & Eaton, Barclay & Sons, Castleberg’s, S&N Katz.

At one point these combined brands operated almost 3,000 locations. Finlay contributes about 60% of Grand Met assets and about 70% of the Group’s profits.

Is Finlay just fine jewelry? Do you have any family connections in the industry?

excl_11122017_2b.jpgMost jewelers are the second or third generation. I am not. I acquired my first fine jewelry company in 1992 which at one time had 5 retail locations and manufacturing. The liquidity, cash flow, and romance of it were alluring. It was sexy and very profitable. We started to acquire large inventories of precious metals and loose stones from wholesale, manufacturers, and retailers that had gone bankrupt. Most US jewelry chains were built upon debt finance through the 1980s and 1990s. So, finance really became the profit center for the US jewelry market. Vertical Integration, Economies of Scale, and a program I created called Vendor Exclusivity are the core principals we have adhered too.

Finlay participates in many levels of the jewelry market. Although we do not deal in costume or synthetics. But you can find our designs on the red carpets around the world. In 2000, I created the diamond tennis earring (ear climber). These custom-made pieces sell for $300,000. They debuted on the red carpet of the Cannes Film Festival as part of a suit worn by family members of the President of France.

Can you walk us through the workings of the companies with respect to their business strategies?

Finlay is vertically integrated, both wholesale and retail. After decades of purchasing bankrupt firms and inventories, we have significant resources. We have substantial footprints across North America like Finlay, Whitehall, Marks Bros., Friedman’s, and Lundstrom Jewelers. Brands such as Diamonds on Rodeo and L.D. Giddens are iconic local brands. S&N Katz, Jay B. Rudolph, and Linz Brothers are wholesale. We are consolidating it all into our Lichtenstein’s digital platform.

We are emulating Signet Jewelers online presence. Their local and regional brands exhibit a landing page and encourage guests to their Sterling Family of Jewelers site. We felt that would be the ideal course of action for our own nameplates supported with strong social media campaigns.

Do you manufacture your own jewelry? Where do you source your stones from?

After decades of acquiring jewelers and their inventories, we have substantial resources under management. Inventory control and market management are what Finlay is famous for. We have almost 100,000 cts in inventory that is managed across all our brands. We also have relationships in Antwerp and Russia. When necessary, we turn to several US partners for finished goods.

How is the demand for color diamonds right now, given that price comes at a premium? What's your opinion of diamonds as an investment vehicle?

We do participate in color diamonds, but it is far from our focus. Obviously, the price per carat makes it prohibitive to most consumers. Players like Graff and Leviev really have a handle on that market far better than we do. I was recently offered a red diamond for $50 million with absolutely no negotiating room on the price. For that price, we could have bought a regional competitor adding 100 locations and $100 million in revenue. So, of course, that transaction was not for us.

The future of the diamond industry is congruent with the future of Finlay. I was in Moscow for G20 on the dawn of the public offering of Alrosa. We have tremendous interest in working with Alrosa. Unfortunately, the current political environment has kept us at bay. It is just too difficult to market Russian diamonds in the United States at this time. For 11 years our goal has been to secure a multi-year contract to purchase between $500-700 million per annum in diamonds for the North American market.

Which lab do you use to certify your stones?

excl_11122017_1a.jpgMy personal preference is GIA certed stones. I have tremendous faith in their operation. That being said I have had great experiences with IGI and EGL. Obviously, many of our relationships with suppliers have been over decades and built on trust.

I encourage anyone looking to make a purchase that they make sure the diamond is certified. It is the best possible way to take two unique works of art and comparing them on even footing. Organizations such as GIA and AWDC help to build confidence in our industry and with our product.

The US is a huge market for gems, diamonds, and jewelry. What is your Group's USP?

North American is a $100 billion market. This number is divided up across some 26,000 jewelers with Signet’s Zales and Sterling Jewelers as our largest competitor with 3,000 locations and $6 billion annually.

Over the last century, our legacy nameplates have earned about $50 billion from thousands of locations and tens of millions of customers. We have those generations to build upon. Above that, our purchasing power and inventory depth across our 30 brands allow us significant economy and control. Our USP also includes branded merchandise not available from other jewelers.

How is demand in the current US jewelry market? Has the jewelry uptake increased from the slowdown in the past?

Entering Q4 of 2017, that is the most pressing question. I believe there is a lack of focus and leadership in the diamond market. Suppliers do not know how to communicate with the generations they hope to groom as future lifelong consumers. They continue to lean on the Baby Boomers for the bulk of their sales. We need fresh messaging and vehicles within the industry for consumers and retail or everyone will be buying costume jewelry for each other by 2020.


Industrywide everyone is now rushing to stock inventories with the magical balance between classic dependable and trending fads. I see the high end of the market will have a very strong close this year. Simultaneously the more moderately priced items will be very hot for the holidays. I am focused on more external forces like the economy, commodities prices, and influences on the political landscape which dictate how strong the middle market will be in the next quarter.

Is Finlay operating online as well?

One of the most exciting ventures in recent years at Grand Met has been our online initiative. Lichtenstein’s Department Store was perfect for us to expand into a global digital platform. Our ambitions were not to simply offer luxury goods and services to our existing North American clientele, but to the world. While LVMH’s 24 Sevres and Richemont’s Net-A-Porter offer merchandise from dozens of ateliers also on display at thousands of locations around the globe, you will only find our brands online at Lichtensteins.

What's your opinion of the current diamond industry globally?

If our business plan was simply to sell a lot of jewelry, I believe we would be concerned about the instability apparent in the global diamond industry, especially if we had built our enterprise on billions of debt like so many of our contemporaries. Finlay is intent on deconstructing the current diamond distribution model and disrupting the entire $100 billion industry. That will require $3 billion in finance and a favorable political landscape between North America and Russia.

In order to succeed into the next century, the industry needs to start focusing on the millennials and how they interact with brands and commerce. Heavy investment in message, mobile, and micropayments is paramount.

Who is the face of the diamond industry in North America? Europe? Asia? The World?

I find it fascinating the lack of visible leadership in the diamond and jewelry markets to the general public. I believe for decades DeBeers was leading under the ownership of the Oppenheimer Family. Today it is splintered and broken. Most people are not familiar with Cheng Yu-tung (Chow Tai Fook), Nirav Modi (Firestar), or Vin Lee (Finlay Enterprises).

Aruna Gaitonde, Editor-in-Chief of Asian Bureau, Rough & Polished